Stop-n-Shop operates a downtown parking lot containing 800 parking spaces. The lot is open 2,500 hours per year. The parking charge per car is 50 cents per hour; the average customer parks two hours. Stop-n-Shop rents the lot from a development company for $7,250 per month. The lot supervisor is paid $24,000 per year. Five employees who handle the parking of cars are paid

$300 per week for 50 weeks, plus $600 each for the two-week vacation period. Employees rotate vacations during the slow months when four employees can handle the reduced load of traffic. Lot maintenance, payroll taxes, and other costs of operating the parking lot include fixed costs of

$3,000 per month and variable costs of 5 cents per parking-space hour.

Instructions

a. Draw a cost-volume-profit graph for Stop-n-Shop on an annual basis. Use thousands of parking-space hours as the measure of volume of activity. [Stop-n-Shop has an annual capacity of 2 million parking-space hours (800 spaces X 2,500 hours per year).]

b. What is the contribution margin ratio? What is the annual break-even point in dollars of park- ing revenue?

c. Suppose that the five employees were taken off the hourly wage basis and paid 30 cents per car parked, with the same vacation pay as before. (1) How would this change the contribution margin ratio and total fixed costs? (Hint: The variable costs per parking-space hour will now include 15 cents, or one-half of the 30 cents paid to employees per car parked, because the average customer parks for two hours.) (2) What annual revenue would be necessary to produce operating income of $300,000 under these circumstances?

of the Raw-Material Inventory account as of December 31 of the year just completed is $170,000. Required: 1 . Explain why manufacturers use a predetermined overhead rate to apply manufacturing overhead to their jobs. 2 . How much manufacturing overhead would Opticom have applied to jobs

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Part 1 Manufacturers use predetermined overhead rates to allocate production costs that are not directly identifiable or traceable to specific jobs. These costs are allocated to production...

competitiveness, each profit center can purchase parts either from Manufacturing or from outside firms. Manufacturing operates as a cost center and charges the profit centers for the full cost of the parts. Costs are computed once a year using full absorption costing. The volume of parts used to...

charge of $ 2,800 would be incurred. During the last year , a total of 2 ,200 student- months of education were provided, 1 ,000 of which were for private students and 1 ,200 of which were offered under the contract with Imagine That School. 1 . Compute the following using cost information from year...

manufacturing overhead is applied on the basis of $6 per direct labor hour . • Fixed manufacturing overhead is applied on the basis of machine hours used. • When plans for the year were being made, it was estimated that total fixed overhead costs would be $312,000, and that 96,000 machine hours...

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pls refer to attachment r1 The graph illustrates that fixed overhead costs are treated differently for planning and control purposes than for product costing purposes. For planning purposes,...

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